How Will Debt Settlement Impact My Credit?

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Many people have questions about Debt Settlement. They want to know what the risks are. They want to know what the benefits are as well.  One of the most common questions that people have with regard to Debt Settlement is “How will it impact my credit?” The short answer is that nobody can tell you with complete certainty how it will impact your credit.

Credit reports and credit scores are complex equations that take into account all of your credit accounts, your payment history, balances owed, credit limits and other factors. Any one piece in this puzzle that shifts can have an impact on your score.

Debt Settlement typically happens after an account has been delinquent for a number of consecutive months because of the consumer’s inability to pay the full amount. With each month that the account is delinquent, changes are your credit score is taking a hit. The reality is that settling the debt could stop those delinquencies from continuing. On the other hand, the majority of creditors will report a debt as “settled” instead of “paid in full” or “paid as agreed” when that happens  it could have a negative impact on your credit score as well. The bottom line is that there is no sure-fire way to know what the end result will be when settling a debt. Chances are there will be some impact one way or another to your credit, but nobody will be able to tell you exactly how much.

Make sure to seek the advice and counsel of a reputable agency who will give you as much information about the process as you needand explain the risks and benefits to you. It’s important to be fully informed so you can make an educated decision about whether settlement is right for you.